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Is it me, or does the article seem to be downplaying the development on the map? It seems pretty damn good to me. Hopefully, this will stabilize, if not lower a bit, prices.

well sort of... First they talk that 2004 is going to be lower that 2003... Marcus &amp; Millichap, the real estate investment brokerage company, said there will be 3,190 units in Manhattan in 2004. in 2003 there were 5,900 units completed. If is true then that seems to be low. But then Fritz Frigan, director of leasing at Halstead said that there will be 4,000 rental units coming to the market this year. That is alot if you add the condos units which Fritz didn't mention.

I seem confuse here. But the map shows alot of new stuff for 2005. I dont' know how many units but there is alot of activity in neighborhoods that are becoming hot right now.

Do you guys noticed that the Trump Organization plans to built something on 33 West End Ave with 234 units. If it is on West End Ave. than it is not part of the Riverside Blvd development. Where is it then? What is the cross street? Is this where the Gaseteria site was? :?

The Trump building on West End is only 14 stories and by Costas Kondylis &amp; Partners. The gas station site is at 2-10 West End.

We are not talking about 120 Riverside Blvd right? The one that is under construction right now. It is a little more that 14 stories I think. How do you know about the 14 story building planned on West End by Trump?

Residential developers in Manhattan have benefited from low interest rates and government programs such as Liberty Bonds to help get their projects built.

But when it comes to financing, knowing one's market is everything and a developer could lose his shirt unless the financing matches the project. Anyone who knows the game can tell where a developer is getting his money just by where he is breaking ground for his project.

Developing a co-op in Manhattan North (an area that includes all areas above 96th Street) is a different ballgame from doing a condo project on the Upper East Side or a rental development Downtown.

In Manhattan North, the Richman Group is an active participant in the area's six-year-old New Housing Opportunity Program, a subsidized program run by the city's Housing Development Corporation (HDC) to encourage home ownership in the area. The program uses land provided by the city's Department of Housing Preservation and Development (HPD).

"Most of our work is on affordable housing with low income tax credits," said Richman president William Traylor, whose company is doing three different co-op projects in the area using HDC financing.

In Downtown, an emerging market with a lot of renters, subsidized financing is an attractive financing option. Rockrose Development Corp., an entrenched player and pioneer in residential development in the area, has made the most of this kind of funding.

"We like areas where we see long-term growth - undervalued areas where values will go up over time," said Jon McMillan, the company's director of planning.

The company is big on rentals, and current projects include 2 Gold Street, a Liberty Bond-financed project consisting of 650 units on 52 floors, which is scheduled for completion next year. "Rockrose does like to retain ownership of its properties, so we don't do many condos, which require market prices that are higher than the rental prices," McMillan said.

For its Downtown operations, McMillan said his company uses about 70 percent Liberty Bond financing with another 25 percent coming from the 80/20 program run by the state Housing Finance Agency (HFA) and HDC. However, since last September, Rockrose has ventured outside its Downtown niche with a market rate-financing project in Queens.

But for developers like the Athena Group, which focuses on high-end luxury properties on the Upper East Side and Upper West Side, subsidized financing is all but out of the question. One of its largest projects sits across from Lincoln Center at 43 West 64th St., where an old warehouse was converted into a 140,000-square-foot mixed-use development, with over 110,000 square feet going to condos and another 35,000 square feet for retail space.

With prices averaging about $1,250 per square foot on the property (Athena's in-house research shows the average price per square foot in the city at $831), subsidized financing hardly makes sense. In 2001, the company's project at 838 Fifth Avenue fetched an average of $13 million per apartment, or $2,250 per square foot.

"We couldn't be as competitive, for instance, on building multifamily units by using conventional financing, which would require some subsidy or tax exempt bonds," said Louis Dubin, Athena's president, who added that his company's typical deal was $60 million to $120 million.

But Athena's future plans also include a project that goes against the grain, which Dubin said might shock some people. He said his company plans to build a privately financed high-rise luxury condo in Harlem within the next 12 months, saying he believes there is a market for that kind of project.

Glenwood Management Corporation, a builder of luxury apartments in all sections of the city, utilizes a varied pattern of financing in different sections of Manhattan.

Gary Jacob, executive vice president at Glenwood, said the company's 30-story 227-unit rental development, the Grand Tier at 1930 Broadway, was done with 100 percent market rate financing. The Upper West Side project, which opened in mid-June, required that market rate money because of the substantial amount of retail space - 90,000 square feet - involved in the project, which killed any chances of subsidized financing.

Glenwood also used Liberty Bond financing for its Liberty Plaza project in Downtown Manhattan and 80/20 program financing for a rental project in East Harlem. Jacob said the biggest difference among the three properties were the rents that could be obtained, ranging from the much higher Upper West Side rents to the considerably lower Downtown rents and even lower Harlem rents.

The structure of financing for residential development has changed from a decade ago, when there was easy availability of 100 percent financing, developers said. Today, most lenders require developers to contribute as much as 35 percent in equity contributions to get market rate financing.

McMillan said 100 percent financing in the late 1980s caused the development of unnecessary projects and overbuilding in the market, which eventually led to many developers losing their buildings to lenders. He said the new equity requirements simply weed out those who don't have the resources to do the work. In Athena's projects, Dubin said his company typically puts in between 25 percent to 35 percent of its own money as equity, with debt making up the difference.

While financing options might differ in different sections of the city, developers agree that construction costs are the same in all areas. However, those costs have been rising lately, thanks to the diversion of building materials for Iraq's reconstruction and the overall building boom. Dubin notes that construction costs have shot up an average 20 percent since the past year, especially for raw materials such as copper and wood.

New Building by Neighborhood
One developer’s take on best and worst areas to build

By Stuart W. Elliott
July 2004

While planned new construction in Manhattan this year and in 2005 is spread out over the island, several areas are attracting noticeable concentrations of new buildings.

Kenneth Horn, president of Alchemy Properties, which currently has four projects underway in Manhattan (two in Chelsea, one in Noho and one in Gramercy Park) ranging from 10 to 65 units, had this to say about the some of the areas where development looks set to occur:

High teens/low 20s (Btwn 6th and 7th Avenues)

The area is seeing an influx of families. "In our project that we just completed (the Paradigm at 146 West 22nd Street), we were limited to one unit per floor," Horn said. "We decided to make big family apartments, and we attracted a wide range of buyers, because there are a lot more families moving to Chelsea."

But there are obstacles. "Some of the wholesale prices are becoming prohibitive for developers," said Horn, who is just beginning a 67-unit building at 121 West 19th Street.

One large building is now asking north of $350 a square foot, which Horn thinks is too high. "We didn't have to pay that," he said. "It might mean things happen in fits and starts rather than all at once."

Low 50s along 10th Avenue

"I think it's going to take a while," said Horn. "You're going to need a real pioneer in that neighborhood. There are no residential services, and I don't think you'll ever displace the commercial tenants there."

Noho

"We thought the migration was going to be east over Lafayette," said Horn of the rationale behind his company's development of 57 Bond Street, which is nearing completion. "The plan was to attract people that did not want to live in Soho or Tribeca because it's too established. Big players are now moving into the area," he said.

Lower East Side

AvalonBay Communities' Avalon Chrystie Place is going up at the corner of Bowery and Houston on a three-acre piece of property. "To find a mass of space like that, you can basically transform the entire neighborhood by yourself. Three years from now, it won't look the same," Horn said.

"But it's very hard to find development sites in the whole area." he added. "We'll see people seeking infill opportunities for the most part."

Upper East Side and Upper West Side

"Those are the golden areas. We bid on a property there recently and we were outbid by 40 percent," Horn said.

Stribling &amp; Associates has been appointed the exclusive sales agent for the Loft Residences at 116 Hudson, the latest of actor Robert DeNiro’s TriBeCa developments.

Sales began earlier this month with prices starting at $2.3 million.

The project involves combining an existing vacant 19th century brick structure with a new glass and metal curtain wall structure. There will be 4 full-floor, two-bedroom apartments as well as a duplex penthouse and 4,000 square feet of retail space. Each apartment will occupy both the brick and glass sectors of the building, combining modern and traditional elements.

Despite persnickety boards and intrusive applications, the number of Manhattan co-op apartment sales has reached an all-time high, according to an industry-wide report.

In its second-quarter report, the Real Estate Board of New York (REBNY) — which compiled data from several of the city's top real-estate firms — has found that co-op transactions have increased 51 percent from a year ago to 1,113, breaking the 1,000 barrier for the first time since the group began tracking residential sales 11 years ago.

"The improved economy, coupled with the threat of rising interest rates, has caused New Yorkers to act quickly to snatch up apartments," said REBNY President, Steven Spinola.

The report also found that co-op apartment prices rose an average of 14 percent to $1.020 million, the second consecutive quarter with prices above the $1 million level. The median sales price, representing the mean value between the highest and lowest prices, rose 11 percent to $585,000.

While the co-op numbers are impressive, they still lag behind Manhattan condominiums.

"Those numbers are surprising, considering the stiff anti-co-op sentiment that's out there," said Douglas Elliman managing partner Dolly Lenz. "I know plenty of co-op owners, and former owners, who will never buy in a co-op again."

A number of recently released six-month in-house reports by the top real-estate brokerage firms show condo prices rising over 30 percent — more than double the increase for co-ops.

Also notable was a 60 percent spike in co-op sales in northern Manhattan, defined as sales above 96th Street to the east and above 110th Street on the west.

The reports also found record median per-room apartment price hikes: 12 percent for studio and one-bedroom apartments, 16 percent for two-bedroom apartments and 25 percent for three-bedroom places.

There is no question that rentals are rebounding, but how fast and how far will they go?

Boosted by increased hiring and refugees who had given up on the frenzied sales market, the rental market first started to show signs of life in February, said Fritz Frigan, director of leasing of Halstead.

Now the market - which has been largely downtrodden since the dot-com bubble burst - is going strong.

"Things are in full swing," said Frigan. "After four years, this is not going to be just a seasonal thing."

Frigan said his data showed a 1.5 percent increase in rents from October 1 through March 31, the most recent data available. Rents had actually been dropping from October to January, so the numbers for recent months are even stronger than they first might appear, he said.

Going forward, Frigan said he expects 5 to 6 percent growth in price of rents between the start of this year and the start of 2005.

Andrew Heiberger, president of Citi Habitats, now a division of Corcoran, said rents have gone up with lower-priced units as well as at the upper end of the market.

"We're starting to see rents rise on units that go for $1,600 to $2,500," he said. "Properties at the high end, above $6,000 per month, are doing well as a result of the overinflated condo market."

Frigan said the high-end rental market, which drew buyers who grew
disgruntled with the sales market, heated up first, and "now the small one-bedroom prices are going up as well," largely as a result of more hiring by companies in the city.

Heiberger said the vacancy rate for rental apartments in Manhattan is "well under 2 percent," and added he expects the market to get "tighter and tighter."

Many landlords have stopped paying brokers' commissions or offering other incentives such as one or two months' free rent.

Heiberger said that of 500 buildings offering incentives at the beginning of the year, one-third had dropped off the list as of mid-June.

"We might see OP [owner paid] concessions drop out by summer's end," said Heiberger. "If they don't, we'll probably have to wait until January of next year."

Last month, Glenwood Management, which has more than 20 luxury apartment buildings in Manhattan, said it would no longer pay fees to brokers for two- and three-bedroom apartments. The company said the move was prompted by the turnaround in the rental market in the past six months.

Glenwood said it would continue to pay broker fees for large apartments in its three new buildings: Liberty Plaza in the Financial District, Hampton Court at Gracie Point and the Grand Tier across from Lincoln Center, however.

While new projects have generally offered the most incentives, some "lower quality walkup buildings" are still paying brokers' fees, though it's "going in the direction of less and less," Frigan said.

The Hell's Kitchen area, site of new rental construction, still offers considerable incentives.

"Secondary locations like Clinton still need work," said Neil Binder, principal of Bellmarc.

The overall strength of the rental market has lead some brokerages focused on sales to get into the rental game.

The merger in which Corcoran bought Citi Habitats seems well timed from the point of view of taking advantage of the improving rental market.

J.C. DeNiro &amp; Associates, a boutique firm in Chelsea, decided to start up a rental program for the summer, presumable to grab a piece of the action.

The "summer sales associate program" involved recruiting students at colleges to work as rental agents for the summer. The group of seven associates started in early June, and some already plan to stay on past the summer, Mathieson said.

"We got a huge amount of response," said Mathieson. "They're fully licensed and trained, and it's a stimulating way to spend a summer and make money."

36 Hudson Street The sign on the scaffolding at 36 Hudson Street says, "The wait is over." Since the mid-1990s, the Mohawk Building has been considered for a number of uses, including cooking school and hotel, the Daily News reports. Now, work has begun converting the seven-story building into 12 condos, which will be priced from $2 million and up.

Copyright 2003-2004 The Real Deal.

Mohawk rising

July 28, 2004

The sign on the scaffolding at 36 Hudson St. says, "The wait is over."

Those are welcome words for Tribeca residents, who've been waiting - since the mid-1990s - to see what becomes of the Mohawk Building. Think apartments. Big apartments, priced at about $2 million and up.

Celebrity chef David Bouley had other uses in mind for the handsome seven-story brick building - first a cafe, cooking school and food-research institute, later a boutique hotel. Then Sept. 11 happened.

Now architect/developer Joseph Pell Lombardi, who took over the 1890s-vintage building, is converting it into 12 condos over the next 18 months. "We're aiming for the happy ending," he said. Corcoran Group's Jim Brawders is marketing it.